Infra and real estate firms in bright spot after recent govt push

In a big boost to the infrastructure sector, besides other initiatives, the government of India last week approved one-time financial assistance for incomplete and languishing national highway (NH) projects. The government says projects where 50 per cent of construction was completed till November 2014 will get this one-time financial assistance.

Moreover, a new policy has been introduced for highway developers to allow exit from projects after two years of completion. The government has also allowed debt-ridden road developers to reduce their loans by exiting some of the projects.

Actually, the road sector has been constrained by the economic slowdown and lack of private sector participation. It is good to see that in order to revive the sector, the government has decided to work on the engineering, procurement and construction (EPC) model, where the construction of roads would be funded by the government but executed by private developers.

Another good initiative for the infrastructure sector is that the government in September approved setting up of a committee to propose to the Exim Bank a scheme to offer concessional finance to those companies which are bidding for infrastructure projects abroad.

This will surely boost businesses of the infrastructure companies with healthy order books. With all these initiatives, the government's most ambitious 'Make in India' programme should also see a huge success and give fillip to the country's economic growth.

No doubt, the Modi government is promoting his policies of attracting the manufacturing industry to India under the slogan 'Make in India' and of creating smart cities. The efforts of the Modi government in pitching for overseas investments in various sectors, including infrastructure, have started showing results. If the news is to be believed, Malaysia recently proposed to invest $30 billion in Indian infrastructure.

Japan, too, has strengthened infrastructure ties with India. Japan International Cooperation Agency (Jica) has committed a loan of $4.58 billion for a mega railway project between New Delhi and Mumbai along the western corridor.

Despite turmoil in most global markets, India has emerged one of the fastest growing markets globally. The current moves by the government are a good push to the infrastructure sector. The government's focus on clearing infrastructure as well as road projects is expected to provide the much-needed lifeline to infrastructure companies.

(The author is CMD, SMC Investments and Advisors. Views and recommendations expressed in this section are his own and do not represent those of EconomicTimes.com.)